Khaliq Ahmad, Bareilly V. Income Tax Officer, Bareilly

ITA 71/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1158 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Application of stay; Additional evidence; Reason to believe; Reassessment proceedings
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER S.A. NO.01/LKW/2017 [IN ITA NO. 71/LKW/2017] ASSESSMENT YEAR: 2010 - 11 KHALIQ AHMED MOH. TAN DA BAREILLY V. INCOME TAX OFFICER WARD 1(3) BAREILLY T AN /PAN : AJBPA1101A (APP LIC ANT) (RESPONDENT) IN ITA NO. 71/LKW/2017 ASSESSMENT YEAR: 2010 - 11 KHALIQ AHMED MOH. TANDA BAREILLY V. INCOME TAX OFFICER WARD 1(3) BAREILLY T AN /PAN : AJBPA1101A ( APP ELL ANT) (RESPONDENT) ASSESSEE BY: SHRI RAKESH GARG, ADVOCATE DEPARTMENT BY: SHRI AJAY KUMAR, D.R. DATE OF HEARING: 10 01 201 8 DATE OF PRONOUNCEMENT: 16 01 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A), BAREILLY DATED 19/12/2016. THE ASSESSEE HAS ALSO FILED A STAY APPLICATION WITH A PRAYER TO STAY THE DEMAND RAISED BY THE ASSESSING OFFICER . S.A. NO.01/LKW/2017 & ITA NO.71/LKW/2017 PAGE 2 OF 7 2 . WITH REGARD TO THE STAY APPLICATION, THE FACTS EMERGING FROM THE RECORD ARE THAT A WRIT PETITION WAS FILED BEFORE THE HON'BLE ALLAHABAD HIGH COURT BY THE PETITIONER/ASSESSEE SEEKING MANDAMUS THAT NO RECOVERY BE MADE FROM THE PETITIONER DURING THE PENDENCY OF THE STAY PETITION BEFORE THE ITAT, LUCKNOW BENCH. IN THE PRESENT CAS E, THE ASSESSMENT ORDER DATED 16/10/2015 HAS BEEN PASSED BY THE INCOME TAX OFFICER, WARD 1(3), BAREILLY. BEING AGGRIEVED BY THE AFORESAID ASSESSMENT ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHICH WAS DISMISSED BY ORDER DATED 19/12/2016, A GAINST WHICH ASSESSEE HAS FILED AN APPEAL ALONG WITH STAY APPLICATION BEFORE THE ITAT LUCKNOW BENCH ON 25/1/2017 AND 7/2/2017 RESPECTIVELY. THE ASSESSEE ALSO FILED STAY PETITION BEFORE THE REVENUE AUTHORITIES I.E. INCOME TAX OFFICER, WARD 1(3), BAREILLY O N 25/1/2017. 3 . IN THE WRIT PETITION, IT WAS SUBMITTED BY THE ASSESSEE THAT RECOVERY/ATTACHMENT OF BANK ACCOUNT WAS PRESSED AGAINST THE ASSESSEE DURING THE PENDENCY OF THE STAY APPLICATION AND IT WAS PRAYED THAT TILL DISPOSAL OF THE STAY APPLICATION, NO COERC IVE ACTION AGAINST THE ASSESSEE SHOULD BE TAKEN. THE HON'BLE JURISDICTIONAL HIGH COURT DISPOSED OF THE MATTER WITH THE DIRECTION THAT ITAT LUCKNOW BENCH MAY DECIDE THE STAY APPLICATION OF THE ASSESSEE EXPEDITIOUSLY BEFORE 27/2/2017 AND TILL THEN NO COERCI VE ACTION BE TAKEN AGAINST THE ASSESSEE HEREIN. 4 . THE LD. A.R. OF THE ASSESSEE, A T THE OUTSET , SUBMITTED THAT IF THE APPEAL OF THE ASSESSEE IS HEARD AND DECIDED ON PRIORITY, ASSESSEE WILL NOT PRESS FOR THE STAY APPLICATION, TO WHICH THE LD. D.R. HAS NO OBJ ECTION. 5 . AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIES, WE HAVE DECIDED TO TAKE UP THE APPEAL OF THE ASSESSEE FOR HEARING. ACCORDINGLY, S.A. NO.01/LKW/2017 & ITA NO.71/LKW/2017 PAGE 3 OF 7 THE STAY APPLICATION OF THE ASSESSEE IS DISMISSED AS NOT PRESSED AND WE PROCEED TO DISPOSE OF THE APPEAL OF THE ASSE SSEE ON MERIT. 6 . NOW COMING TO THE APPEAL OF THE ASSESSEE, WE FIND THAT ASSESSEE HAS FILED MULTIPLE GROUNDS OF APPEAL WHICH ARE INTERLINKED AND ARGUMENTATIVE IN NATURE. ASSESSEE VIDE APPLICATION DATED 13/12/2017 HAS ALSO FILED ADDITIONAL GROUNDS, WHICH ARE AS UNDER: - 01. BECAUSE THE REASONS RECORDED U/S 148 AND THE NOTICE ISSUED IS WITHOUT JURISDICTION, BAD IN LAW AND BE QUASHED. 02. BECAUSE THE NOTICE U/S 148 HAS BEEN ISSUED BY LD. AO ON 23.03.2015 WITHIN 4 YEARS OF THE END OF THE ASSESSMENT YEAR WITH THE APPROVAL OF THE JCIT, THE SAME IS CONTRARY TO THE PROVISIONS OF SECTION 151(2), BAD IN LAW AND BE QUASHED. 03. BECAUSE THERE BEING NO NEXUS BETWEEN THE MATERIAL AND THE REASONS TO BELIEF THAT INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECT ION 147, THE ENTIRE - PROCEEDINGS ARE WITHOUT JURISDICTION BAD IN LAW AND BE QUASHED. 04. BECAUSE MERE DEPOSITS IN BANK ACCOUNT, WITHOUT ANY MATERIAL WOULD NOT CONSTITUTE REASONS TO BELIEVE, THE REASSESSMENT PROCEEDINGS ARE BAD IN LAW AND BE QUASHED. 7 . THE LD. A.R. OF THE ASSESSEE PRAYED THAT SINCE THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE ARE PURELY LEGAL IN NATURE AND GO TO THE ROOT OF THE MATTER, THE SAME MAY BE ADMITTED. IN THIS REGARD, THE LD. A.R. OF THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NTPC LTD. VS. CIT, 229 ITR 383 AND ALSO THE DECISION OF THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF ASSAM CO. INDIA LTD., 256 ITR 423. 8 . THE LD. D.R. HAS OBJECTED TO THE ADMISSION OF THE ADDITIONAL GRO UNDS. S.A. NO.01/LKW/2017 & ITA NO.71/LKW/2017 PAGE 4 OF 7 9 . SINCE THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE GO TO THE ROOT OF THE CASE AND NO ADDITIONAL EVIDENCE IS REQUIRED TO ADJUDICATE THE SAME, WE ADMIT THE ADDITIONAL GROUNDS TAKEN BY THE ASSESSEE. 10 . THE BRIEF FACTS ARE THAT THE ASSESSEE, AN INDIVIDUAL I S ASSESSED TO TAX AND HE IS IN THE BUSINESS OF WHOLESALE TRADING OF FRUITS AND HAS BEEN FILING THE RETURN OF INCOME FOR THE PAST SEVERAL YEARS AND IS ASSESSED IN THE PAST. FOR ASSESSMENT YEAR 2010 - 11 , NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, AS THE INCOME EARNED DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11 WAS BELOW THE MAXIMUM AMOUNT OF INCOME CHARGEABLE TO TAX. THE ASSESSEE IS CONDUCTING ITS BUSINESS BY UTILIZING THE BANKING FACILITIES WITH ICICI BANK. 11 . AT THE TIME OF HEARING B EFORE US, THE LD. A.R. OF THE ASSESSEE HAD FILED A PAPER BOOK RUNNING INTO 205 PAGES AND DREW OUR ATTENTION PAGE 205 OF THE PAPER BOOK WHICH IS A NOTE SHEET WHEREIN THE REASONS RECORDED BY THE ASSESSING OFFICER FOR INITIATION OF PROCEEDINGS UNDER SECTION 1 47/148 OF THE ACT ARE RECORDED . THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE ASSESSING OFFICER HAS SIMPLY STATED THAT CERTAIN AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND , THEREFORE , HE BELIEVES THAT THE INCOME HAS ESCAPED ASS ESSMENT. THERE IS NO INDEPENDENT FINDING RECORDED BY THE ASSESSING OFFICER NOR ANY SPECIFIC REASON BROUGHT OUT FROM ANY MATERIAL ON RECORD TO SHOW THAT THERE WAS ANY INCOME WHICH HAS ESCAPED ASSESSMENT AND WITHOUT POINTING OUT ANY DEFECT , WHICH IS ON THE BASIS THAT CERTAIN AMOUNTS WERE DEPOSITED, THE PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT IS UNWARRANTED, ILLEGAL AND BEYOND THE SPIRIT OF LAW. THE LD. A.R. OF THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - S.A. NO.01/LKW/2017 & ITA NO.71/LKW/2017 PAGE 5 OF 7 ( 1 ) BIR BAHADUR S INGH SIJWALI VS. ITO, ITA NO.3814/DEL/2011, ORDER DATED 20/1/2015 (ITAT, DELHI). ( 2 ) ASHWANI KUAMR VS. ITO, ITA NO.129/ASR/2015, ORDER DATED 23/2/2016 (ITAT, AMRITSAR). ( 3 ) GYAN PRAKASH MOTWANI VS. DCIT, ITA NO.692/LKW/2015, ORDER DATED 31/8/2016 (ITA T, LUCKNOW). ( 4 ) PARIMISETTI SEETHARMAMMA VS. CIT, HYDERABAD, ORDER DATED 21/4/1965 (SC) 12 . THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 13 . WE HAVE PERUSED THE CASE RECORD, HEARD THE RIVAL CONTENTIONS, AND ANALYZED THE FACTS & CI RCUMSTANCES AND VARIOUS JUDICIAL PRONOUNCEMENTS PLACED BEFORE US. WE HAVE PERUSED THE COPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER FOR INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT AS PLACED IN THE PAPER BOOK . WE OBSERVE THAT AS HEL D BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF P RASHANT S. JOSHI VS. ITO (2010), 230 CTR 232 , THE ASSESSING OFFICER MUST HAVE REASON S TO BELIEVE THAT SUCH IS THE CASE ( I.E. ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A PARTICULAR YEAR) BEFOR E HE PROCEEDS TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT. IN OTHER WORDS, WHEN NO REASONS ARE RECORDED FOR REOPENING THE ASSESSMENT PRIOR TO ISSUANCE OF NOTICE , THE REASSESSMENT PROCEEDINGS MUST FAIL FOR THAT REASON ALONE. IT IS WELL SETTLED IN LAW THA T THE REASONS AS RECORDED FOR REOPENING THE ASSESSMENT ARE TO BE EXAMINED ON A STANDALONE BASIS. NOTHING CAN BE ADDED TO THE REASONS SO RECORDED , NOR ANYTHING CAN BE DELETED FROM THE REASONS SO RECORDED. T HE HON'BLE BOMBAY HIGH COURT IN ANOTHER CASE I.E. IN THE CASE OF HINDUSTAN LIVER LTD . VS. ITO (2004) S.A. NO.01/LKW/2017 & ITA NO.71/LKW/2017 PAGE 6 OF 7 268 ITR 332 HAS OBSERVED THAT THE REASONS ARE REQUIRED TO BE READ AS THEY ARE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION OR ADDITION CAN BE MADE TO THOSE REASONS AND NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF THE REASONS NOT RECORDED. IT IS FOR THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM. THE REASONS RECORDED SHOULD BE SELF - EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR REASONS. IN THE PRESENT CASE, THE REASONS RECORDED STATES THAT CASH DEPOSITS ARE MADE IN THE BANK ACCOUNT OF THE ASSESSEE, BUT MERE FACT THAT THESE DEPOSITS HAVE BEEN MADE IN BANK ACCOUNT DOES NOT INDICATE THAT THESE DEPOSITS CONSTITUTE AN INCOME WHI CH HAS ESCAPED ASSESSMENT. THE REASONS RECORDED FOR REOPENING ASSESSMENT DO NOT MAKE OUT A CASE. THE ASSESSING OFFICER ON A STANDALONE BASIS AND ON SELF - EXPLANATORY BASIS HAS NOT BROUGHT OUT ANY REASONS FOR SUCH REOPENING. WHEN WE ARE EXAMINING THE DEPO SITS PER SE IN THE BANK ACCOUNT OF THE ASSESSEE , COULD IT BE THE BASIS OF HOLDING THE VIEW THAT INCOME HAS ESCAPED ASSESSMENT ? IN OUR HUMBLE UNDERSTANDING , IT IS IN THE NEGATIVE. THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IS NOT ESTABLISHE D BY THE ASSESSING OFFICER. THE LD. CIT(A) HAS NOT AT ALL ADJUDICATED UPON THE SIGNIFICANCE OF THE REASONS RECORDED BY THE ASSESSING OFFICER BEFORE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT IN HIS ORDER AND SUMMARILY DISMISSED THE APPEAL FILED BY THE ASSESSEE. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THE FACTUM PER SE OF DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE COULD NOT BE THE BASIS FOR HOLDING THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT OVERLOOKING THAT THE SOURCE OF DEPOSITS NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE AND THAT SUCH REASONS RECORDED WERE NOT SUFFICIENT TO BELIEVE ESCAPEMENT OF INCOME. WE, THEREFORE, QUASH THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U NDER S.A. NO.01/LKW/2017 & ITA NO.71/LKW/2017 PAGE 7 OF 7 SECTION 147/148 OF T HE ACT AND CONFIRMED BY THE LD. CIT(A) AND ALSO SET ASIDE THE ORDER OF THE LD. CIT(A) ALLOWING THE APPEAL OF THE ASSESSEE. 14 . SINCE WE HAVE QUASHED THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER, THE OTHER ISSUES RAISED BY THE ASSESSEE ARE AC ADEMIC IN NATURE AND INFRUCTUOUS. 15 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 / 01 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH JANUARY , 201 8 JJ : 1001 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR